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TMI Blog2022 (2) TMI 1478X X X X Extracts X X X X X X X X Extracts X X X X ..... e difference of opinion, as formulated by the Bench, is reproduced below:- DIFFERENCE OF OPINION 45. Both Members have agreed that the appellant assessee is entitled to refund on merits as the tax has been paid which was eligible for exemption under Notification No. 25/2012-ST 46. In view of the difference of opinion, the following questions arise for consideration by learned 3rd Member: (1) Whether the limitation prescribed under section 11B of the Central Excise Act will not be applicable as the tax was paid erroneously though eligible to exemption and as such is in the nature of deposit and hence limitation is not attracted as held by Member (Judicial) following the ruling of Hon ble Karnataka High Court in KVR Construction affirmed by Hon ble Supreme Court 2018 (14) STR J17. OR Limitation prescribed under section 11B is applicable as held by Member (Technical) in view of the ruling of Hon ble Supreme Court in Mafatlal Industries Vs. Union of India- 1997 (89) ELT 247. 2. The appellant is engaged in providing commercial or industrial construction services as defined in section 65(25b) of the Finance Act, 1994 the Finance Act. For the services rendered to the MP Government through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 195 (Kar,), against which the appeal filed by the Department before the Supreme Court was dismissed (Commissioner v/s KVR Construction 2018 (14) G.S.T.L. J70 (S.C.)), the Member (Technical) held that the limitation prescribed in section 11B of the Excise Act would be applicable in view of the judgment of the Supreme Court in Mafatlal Industries Ltd. v/s Union of India 1997 (89) E.L.T. 247 (SC). 6. What, therefore, needs to be decided is whether the limitation provided in section 11B of the Excise Act would be applicable when a refund is filed on the ground that the amount was deposited under a mistaken notion as there was no liability to pay service tax. 7. To appreciate this issue, it would be pertinent to reproduce the relevant portions of section 11B of the Excise Act, which are as follows:- 11B. Claim for refund of duty and interest, if any, paid on such duty (1) Any person claiming refund of any duty of excise and interest, if any, paid on such duty may make an application for refund of such duty and interest, if any, paid on such duty to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise before the expiry of one year from the relevant date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstruction Projects Ltd. (CEC Projects Ltd.), Plot No. 32, Sagar Society, Road No. 2, Banjara Hills, Hyderabad-500034 2. Service Tax Registration Number AABCC5680QST001 3. Service Provided Construction/Development of Farmers Facilitation Centres for improvement of Warehousing and Agro Marketing Infrastructure for Madhya Pradesh State Government 4. Period 30-09-2012 to 30-06-2014 5. Amount of Refund claimed Rs. 1,60,81,347/- 6. Proof of Payment of Service Tax Relevant Challan Copies (EReceipts) are enclosed. 7. Grounds of Refund As per Annexure-A 8. Bank Details ICICI Bank Ltd. Hyderabad Branch Account No. -000805005884 RTGS/NEFT/IFSC Code-ICIC0000008 It is requested that the refund claim may please be processed and make the payment to us at the earliest. 10. It would be seen from the aforesaid application that the grounds for refund have been provided in Annexure-A to the application. The relevant portion of the grounds as contained in Annexure A to the application are reproduced below:- xxxxxxxxxxxxxxxxxxxx We are submitting the claim for refund of the amount of Rs. 1,60,81,347/- which was paid during the period 30-09-2012 to 30-06-2014 due to misunderstanding of the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim had not been filed for refund of duty or service tax, but was only for refund of an amount paid by the appellant under a mistake, there was no need to file the refund claim in the form R prescribed for refund of duty/tax. 12. The contention of Shri R. Muralidhar, learned counsel appearing for the appellant is that the limitation provided in section 11B of the Excise Act would not be applicable to cases where an amount is paid by mistake. In support of this contention, learned counsel relied upon the decision of the Division Bench of Karnataka High Court in KVR Construction dismissing the Writ Appeal filed by the Department against the decision of a learned judge of the Karnataka High Court holding that the refund claim filed by KVR Constructions towards the amount deposited by mistake cannot be subjected to the limitation prescribed under section 11B of the Excise Act. The appeal filed by the Department before the Supreme Court to assail aforesaid judgment of the Division Bench of the Karnataka High Court was also dismissed on 11.07.2011. Learned Counsel also made reference to various judgments of the High Courts, including the jurisdictional Telengana High Court, as also to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ef or collected without authority of law. To examine this issue it would be necessary to refer to the decisions rendered in this context. 17. In Hind Agro Industries Limited v/s Commissioner of Customs 2008 (221) ELT 336 (Del.), the Delhi High Court examined whether the Tribunal was justified in rejecting the refund applications filed for refund of cess, even after holding that cess was not payable by the appellant, on the ground that the applications were filed beyond the statutory time limit prescribed under section 27 of the Customs Act. Section 27 of the Customs Act is pari materia to section 11B of the Excise Act and provides that any person claiming refund of any duty paid by him may make an application in such form and manner as may be prescribed for such refund before the expiry of one year from the date of payment. The High Court held that the appellant had erroneously paid cess for the period from 15.01.2001 to 19.02.2002 under a mistake of law, since it had paid the cess when in fact no such cess was payable. There was, therefore, no question of processing the claim of refund of such amount in terms of the Customs Act at all because the payment made mistakenly was not un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 of the Constitution of India and also by virtue of Section 72 of the Contract Act. In such cases, period of limitation would naturally by calculated taking into account the principle underlying Clause (c) of subsection 17 of the Limitation Act, 1963. A refund claim in such a situation cannot be governed by the provisions of the Central Excises and Salt Act or the Customs Act, as the case may be, since the enactments do not contemplate any of their provisions being struck down and a refund claim arising on that account. In other words, a claim of this nature is not contemplated by the said enactments and is outside their purview. 12. The relevant passages of the judgment in Anam Electrical Manufacturing Co. reads as under (E.L.T., p.262-63): FORMAT ORDER Pursuant to the directions given in Mafatlal Industries v. Union of India? 1997 (89) E.L.T. 247 (S.C.) = 1996 (9) SCALE 457, the appeals/Special Leave Petitions coming up for disposal shall be disposed of in terms of one or the other of the clauses below: (1) xxx xxx xxx xxx xxx (2) xxx xxx xxx xxx xxx (3) xxx xxx xxx xxx xxx (4) The above rules, however, do not apply in the case of a claim for refund of duty levied and recovered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the present case. In the said case, the demand raised against the Appellants under the provision of Assam Taxation (On Goods Carried by Road and Inland Waterways) Act, 1954 was struck down by the High Court but the consequential relief of refund of tax collected illegally was not allowed on the ground that it was beyond the period of limitation prescribed under that Act. While allowing the appeal, the Hon ble Supreme Court held that the provision under the said Act for refund would apply only in a case where money is paid under the Act. It was observed in para 13 as under (E.L.T., p.254): Under Article 113 of the Limitation Act, 1963 the limitation was the period of three years from the date the right to sue accrues. It may be noted that in the instant case under Section 23 of the Act, it was provided that the Commissioner shall, in the prescribed manner refund to a producer or a dealer any sum paid or realised in excess of the sum due from him under this Act either by cash or, at the option of the producer or dealer, be set off against the sum due from him in respect of any other period. Section 23 applies only in a case where money is paid under the Act. If there is no provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instant case were bound to refund the cess erroneously paid by the Appellants for the period from 15th January, 2001 till 19th February, 2002 under a mistake of law. They had paid the cess when in fact no such cess was payable. There is no question of processing a claim of refund of such amount in terms of the Customs Act at all because the payment made mistakenly was not under that Act. In the circumstances, the period of limitation under Section 27 of the Act would not apply, as explained in Salonah Tea Company Limited. The applications for refund having been made well within the period of three years after discovery of mistake by the Appellants, are not barred by limitation. Question (a) in para 7 above is accordingly answered in favour of the Appellants. Consequently, the need to answer question (b) does not arise. 17. In that view of the matter, the impugned order dated 22nd May, 2006 passed by the CESTAT, the order dated 26th August, 2004 passed by the Commissioner (Appeals) and order dated 1st April, 2003 passed by the Assistant Commissioner (Refund) are hereby set aside. A direction is issued to the Respondents to refund each of the Appellants the balance amount of the ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services rendered by the Appellant were in fact liable to service tax. If, on the other hand, the CESTAT finds that the services rendered by the Appellant were not amenable to service tax at all, the question of processing the refund application of the appellant with reference to section 11B of the Act would not arise. This legal position has been made explicit under the Customs Act, 1962 in the decision of this Court in Hind Agro Industries Limited v. Commissioner of Customs 2008 (221) E.L.T. 336 (Del). In that decision the Court has discussed the legal position emerging from the decision of the Supreme Court in Mafatlal Industries v. Union of India, 1997 (89) E.L.T. 247 (S.C.). (emphasis supplied) 21. The Delhi High Court in National Institute of Public Finance and Policy v/s Commissioner of Service Tax Order dated 23.08.2018 in SERTA 13/2018 accepted the view of the assessee that when the amount was never payable as there was no levy at all, the question of denying the refund did not arise and that the general principal of limitation will be applicable from the date of discovery of mistaken payment. 22. In KVR Construction, a similar issue as in the present appeal arose before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he nature of construction/services rendered by the petitioner under mistaken notion was payable by the petitioner. Though under Finance Act. 1994 such-service tax was payable by virtue of notification, they were not liable to pay, as there was exemption to pay such tax because of the nature of the Institution for which they have made construction and rendered services. In other words, if the respondent had not paid those amounts, the authority could not have demanded the petitioner to make such payment. In other words, authority lacked authority to levy and collect such service tax. In case, the department were to demand such payments, petitioner could have challenged it as unconstitutional and without authority of law. If we look at the converse, we find mere payment of amount, would not authorize the department to regularize such payment. When once the department had no authority to demand service tax from the respondent because of its circular dated 17.09.2004, the payment made by the respondent company would not partake the character of service tax liable to be paid by them. Therefore, mere payment made by the respondent will neither validate the nature of payment nor the natur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he reasons given by Department for rejecting the refund application filed by the petitioners for refund of an amount paid under a mistake of law was that it was barred by limitation contemplated under section 11B of the Excise Act. After making the reference to the decision of the Karnataka High Court in KVR Construction and the provisions of the section 11B of the Excise Act, the High Court observed as follows:- 18. Having regard to these decisions, we are of the opinion that if the petitioners were not liable to pay service tax on the transaction of the purchase of the constructed area along with goods apart from undivided share of land at all, the payment which was made by the petitioners would not be a payment of service tax at all; that the department also could not have demanded payment of the same from the petitioners; and merely because the petitioners made the payment, it would not partake the character of service tax and the department cannot retain the amount paid by the petitioners which was in fact not payable by them. (emphasis supplied) 27. In Parijat Construction v/s Commissioner of Central Excise, Nashik 2018 (359) E.L.T. 113 (Bom.) the Bombay High Court after plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Excise Act would apply to refund of excise duty leviable under the provisions of the Excise Act and likewise, in service tax matters, it would apply only if the refund is sought of service tax leviable under Chapter V of Finance Act; (ii) The decision of the Supreme Court in Mafatlal Industries Ltd. is in connection with refund of duty payable within the meaning of either the Central Excises and Salt Act, 1944 or the Customs Act, 1962, as the case may be. It would, therefore, not apply when payments are erroneously made. The Delhi High Court in Hind Agro Industries, for this reason, held that the decision of the Supreme Court Mafatlal Industries Ltd. would not apply to refunds of amount made under a mistaken notion and in this connection the Delhi High Court placed reliance upon the decisions of the Supreme Court in Salona Tea Company Ltd. and U.P. Pollution Control Board; (iii) The decision of the Delhi High Court in Hind Agro Industries was followed by the Karnataka High Court in KVR Construction and the jurisdictional Telangana High Court in Vasudha Bommireddy; (iv) Therefore, refund of an amount deposited under a mistaken notion cannot be denied for the reason that applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion prescribed therein. For these reasons, we are of the opinion that the decisions relied upon cannot be of any assistance. (emphasis supplied) 32. A perusal of the aforesaid decision of the Bombay High Court would indicate that tax was paid by the appellant as service tax and refund was also claimed invoking section 11B of the Excise Act. The Bombay High Court also considered the decisions of the Karnataka High Court in KVR Construction and the decision of the Delhi High Court in Hind Agro Industries but distinguished them by observing that when the provisions of section 11B of the Excise Act are invoked, the same would apply with full force including the rule of limitation. In the instant case, the application filed by the present appellant for refund of the amount would indicate that it was specifically stated that the appellant was not seeking refund of the amount under section 11B of the Excise Act since the amount that was paid had no colour of tax and did not attract the provisions of section 11B of the Excise Act. This apart, the subsequent decision of the Bombay High Court in Parijat Construction, is squarely on the issue involved in this appeal and it holds that the limi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the Tribunal. The Tribunal also indicated that this should be so, irrespective of the fact whether one particular assessee was within the jurisdiction of a specified High Court or the original adjudicating authority was located there. ****** 10.2 In a recent decision of the Tribunal in the case of Madura Coats v. CCE, Bangalore reported in 1996 (82) E.L.T. 512, it has been held that the decision of a particular High Court should certainly be followed by all authorities within the territorial jurisdiction of that High Court and that the authorities in another State are not bound to follow the views taken by a particular High Court in the absence of a decision by the jurisdictional High Court with regard to constitutionality of a provisions. The Tribunal has held that since the adjudication of vires of a provision of a statute or Notification is outside the jurisdiction of the Tribunal and the jurisdictional High Court i.e., the High Court having jurisdiction over the authority and the assessee, has not struck down the provision or Notification as ultra vires, the Tribunal has to follow the same and the assessee is entitled to take the stand that he is entitled to the benefit o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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